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Public Contract Code Section 1104 Doesn't Apply to Implied Warranty of Correctness of Plan Claims



It’s the classic tale of two cities. One city is occupied by architects and engineers. The other, by contractors. And while the cities typically co-exist relatively peacefully together, at times, they do not, such as when a defect arises that can either be a design or construction defect.


Sometimes, project owners are pulled into these fights as well. There is a common law rule that when contracting with a contractor the owner impliedly warrants to the contractor that the plans and specifications are sufficiently accurate and correct.


And, if you work on local public works projects, you may be familiar with Public Contract Code section 1104 which provides that, with the exception of design-build projects, local public entities cannot require a bidder to assume responsibility for the completeness and accuracy of architectural or engineering plans and specifications.


In Suffolk Construction Company, Inc. v. Los Angeles Unified School District, 90 Cal.App.5th 849 (2023), the Court of Appeal examined Public Contact Code section 1104 and found that, while Section 1104 prohibits local public entities from contractually requiring contractors to assume responsibility for the adequacy of plans (again, unless the contractor is a design-builder), Section 1104 does not prohibit public entities from contractually requiring contractors to determine the means and methods of achieving performance standards.


The Suffolk Case


Suffolk Construction Company, Inc. was the lowest responsible bidder on a school project of the Los Angeles Unified School District. The Project, known as the Central Region 9th Street Span K-8 Project (just rolls right of the tongue, doesn’t it?), consisted of the construction an elementary school building, a middle school building, a multi-purpose room and a parking structure. The contract price was over $39 million.


Suffolk subcontracted with R.J. Daum Construction Company to perform structural concrete work including the construction of concrete footings. After 1,450 cubic yards of concrete was poured for the the first of the concrete footings, subsidence of the footings and “checkerboard cracking patterns” were observed.


The project engineer KPFF Consulting Engineers directed that all work stop. Core samples were taken which revealed significant gaps between the rebar and the concrete. Then, as these things tend to happen, Suffolk pointed its finger at R.J. Daum and both Suffolk and R.J. Daum later pointed their fingers at KPFF. However, before we get there, it’s important to talk about the “mock” pourings.


The parties agreed to conduct a “mock” pouring, which eventually turned out to become four “mock” pourings to determine the cause of the subsidence and cracking:


Mock Pour 1: Baseline Pour – Mock Pour 1 was intended to simulate the footings as placed. As such, during the mock pour, the same concrete mix from the same concrete supplier was poured using the same means and methods as the original pours. The results were better than the original pours but cracking was still observed. In addition, revibration – where the concrete is re-vibated just before it sets – was used for a subset of the Mock Pour 1. The results, while again better than the original, still resulted in cracking.


Mock Pour 2: Different Supplier – Mock Pour 2 used the same concrete mix and used the same means and methods as the original pours, but used concrete from a different concrete supplier. Again, the results were better than the original but cracking was still observed.


Mock Pour 3: Different Concrete Mix – After Mock Pour 2, LAUSD retained concrete expert Geoffrey Hichborn of Building Forensics International who opined that the loss in concrete volume was due to water loss from the fresh concrete into the soil. Hichborn recommended the use of an accelerant admixture as well as a vapor barrier to prevent “moisture transport . . . between the concrete and soils.” However, for Mock Pour 3 a higher strength concrete mix was used instead. Mock Pour 3 resulted in results similar to Mock Pour 1 and Mock Pour 2, with cracking still observed.


Mock Pour 4: Eureka!: For Mock Pour 4, the parties agreed to use a rat slab with Visqueen sides to isolate the concrete from the adjacent soil. The results were successful! But then the finger pointing began.


Suffolk and R.J. Daum contended that Mock Pour 4 proved that the cracking was a design error because the rat slab and Visqueen sketches provided by KPFF for Mock Pour 4 constituted a design change that was necessary to “correct” a design error.


LAUSD, on the other hand, contended that the use of Visqueen was not a design error because the specifications permitted R.J. Daum to use Visqueen it if wished. Further, LAUSD contended that, while the rat slab and Visqueen corrected the cracking, it was not probative of the cause of the cracking which could have been caused by other factors including:


  • Inadequate or improper vibration techniques.

  • LAUSD also presented evidence that R.J. Daum’s concrete mix used more water than was necessary.

  • LAUSD also presented evidence that R.J. Daum could have mitigated the effects of the excess water by using admixtures to reduce the potential for excess water bleeding.

  • Finally, LAUSD presented evidence that R.J. Daum failed to use the required aggregate composition.


Note: This highlights one practical piece of advice: Follow the specifications, to a “T,” and if you have questions prepare a request for information. When it comes to concrete, you’re not baking cookies for the family, like I just did this weekend.

Ultimately, these issues went to trial. And LAUSD lost.


The trial court permitted Suffolk to include a special jury instruction on Public Contract Code section 1104 and in closing argument Suffolk’s counsel argued:

And essentially, now they’re saying the contractor should have designed the mix further to make up for the error that was left by KPFF. [¶] . . . [¶]
And there’s a jury instruction that’s right on point.
No local public entity shall require a bidder to assume responsibility for the completeness and accuracy of the engineering plans.
In other words, you the public agency cannot transfer this design responsibility to the contractor. Why? Because we want the smart people doing this. We want the people with the stamps doing this, not the contractors. These are public buildings used by the public and we don’t want the designers to shirk their responsibilities and hand this off to the contractors.
And this is a California statute, a code section, so the contract can’t override it. Any provision that the school district stands up this afternoon and says, well, this requires the contractor to adjust the mix to fix this problem is in violation of the statute.

Suffolk’s counsel emphasized Public Contract Code section 1104 again in rebuttal:

Clearly, we’ve seen there’s a Public Contract Code section that says the contract—the owner can’t shift it. And you know why that section exists? Why do we have any statute? It’s to prevent people from doing things like they’ve been doing.
The reason we have that statute is because owners have tried for years to shift that design responsibility to the contractor. And the state spoke and said you can’t do that. The design must stay with the designers, the people with the stamps.

I don’t know how design professionals = smart and contractors = not so smart came up, but ultimately, the jury sided with Suffolk finding that LAUSD breached the implied warranty of correctness of plans and specifications by providing specifications for the concrete footing design that were not correct.


LAUSD appealed.


The Appeal


On appeal before the 2nd District Court of Appeal, the Court of Appeal explained that instructional error (i.e., Suffolk’s special jury instruction) is subject to de novo review explaining that, “‘where it is contended that the trial judge gave an erroneous instruction’ we must ‘view the evidence in the light most favorable to the claim of instructional error.'”


Discussing Public Contract Code section 1104, the Court of Appeal explained:


Section 1104 was enacted to prohibit a public entity from transferring design responsibility to the contractor. The legislative history shows that the Legislature accepted the long-standing division of responsibilities on public construction projects set forth in United States v. Spearin (1918) 248 U.S. 132 (Spearin). However, the Legislature noted a “recent trend by local entities to utilize contract provisions to transfer design liability from architects to general contractors.” (Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1314 (1999-2000 Reg. Sess.) as amended Sept. 2, 1999, p. 3.) The Legislature noted that this trend ran “counter to the long-standing division of responsibilities on construction projects which was formally recognized by the U.S. Supreme Court in [Spearin].” (Ibid.) Due to this trend of contractual shifting of responsibilities, the Legislature enacted section 1104 to prohibit public entities from requiring bidders to assume such responsibilities. The purpose of section 1104 was thus to prevent public entities from attempting to contract around the Spearindoctrine.

Noting, however, that cases interpreting Public Contract Code section 1104 were “sparse,” the Court of Appeal noted that “the few available cases support the premises that Section 1104 is not relevant to a claim for breach of implied warranty of the correctness of plans and specifications” and that “[i]nstead, its purpose is to prevent public entities from attempting to contract around their obligation to provide correct plans and specifications” and “[i]t says nothing about the contractor’s burden to prove that the public entity breached the warranty of correctness.”


Hmm. Let’s chew on that for a moment, literally, as I’m eating one of my cookies as I type. Would Suffolk have been in the safe zone if it alleged that LAUSD had violation Public Contract Code section 1104 rather than alleging that LAUSD breached the implied warranty of correctness of plans and specifications? No, I think it’s more nuanced than that.


While it is true that Suffolk alleged that LAUSD had breached the implied warranty of correctness of plans and specifications as opposed to a violation of Public Contract Code section 1104, the rub, to me, seems to be between Public Contract Code section 1104 and the ability of local public entities to allow contractors to determine their means and methods.


LAUSD argued on appeal that Public Contract Code section 1104 was inapplicable because its specifications did not require Suffolk to assume responsibility for the correctness of its specifications. Rather, argued LAUSD, they “were proper objective performance standards, which allowed the contractor to select the promotions and ingredients in the concrete mix within the parameters of LAUSD’s design.” This, in turn, argued LAUSD, “allowed Suffolk, the entity with the most extensive expertise in performing concrete work, to select the appropriate concrete mix.”


I’m not sure if I buy that though. There was nothing in the appellate decision that indicated that the specifications included performance standards. Rather, the specifications, from what I can gather from the decision, gave the contractor options it could consider using such as the use of Visqueen.


Thus, to me, the issue is how complete do plans and specifications need to be? Certainly, providing a schematic drawing to a contractor and saying “build this for me” is on one end of the spectrum. But what if you told the contractor, use a concrete mix of your choosing, and here’s some options you might want to consider, just make sure the building doesn’t crack or buckle? Is that enough?


Ultimately, I think it’s a sliding scale.


Conclusion


My opinions are, of course, just my opinions. Nevertheless, the Suffolk case is a clear win for local public agencies. As the Court of Appeal noted, however, cases under Public Contract Code section 1104 are “sparse.” I am curious to see what future cases hold under different factual scenarios.

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